BlockTalks x WaterFall DeFi 2nd AMA Transcript!

Block Talks
8 min readAug 21, 2022

We recently hosted an AMA with WaterFall DeFi, on August 19th at 1.30 PM UTC. Many of you might have participated or many of not. But we make sure no one missed out from the knowledge shared by Foss, Strategy & Operation Lead at WaterFall DeFi. So here we are up with the AMA transcript, for those who missed the live session, this blog post will be a saver & feeder of knowledge for them.

Introduction Questions Asked By Team BlockTalks!

Q1. Could you please introduce Waterfall DeFi to our community in layman’s terms?

Ans — So basically we think there’s three major pillars in Finance/DeFi:

1. Exchanges

2. Money Markets

3. Products that helps transfer risk and mitigate risk

1. usually AMMs (Uniswap/Pancake)

2. Aave/Compound/Venus

3. Waterfall DeFi is the risk layer for the DeFi world

There are many hidden risks when normal daily users navigating through the web3 space

for example, smart contract risk, impermanent losses, all contributes problems to many farmers and people who want to earn a stable, predictable profit that helps them sleep at night

Waterfall DeFi’s mission is to transfer these risks to the right hands, the people who wants to further leverage their capital to earn extra yield and rewards in the DeFi market, such as when they are providing liquidity to money markets or liquidity pools

Our products offer 1. fixed, stable yield

or, 2. leveraged, volatile boosted yield

for users to have the flexibility to choose

whether they want to have a wild ride, or if they want to sleep well at night, is up to them

that’s basically what our project is working on.

Q2. What are the advantages of Waterfall DeFi to the other alternatives in the Blockchain field?

Ans — there are numerous advantages

1. predictable yield — users can earn at a fixed rate, compared to many farms you worry the yield may drop big one day

2. risk mitigation — users can avoid their funds getting drained by investing in a insured, protected yield market that has a diversified portfolio of farms aggregated from the top projects in the space

3. leveraged options — users can get extra income by providing capital protection to fixed income users, they earn more by taking on the risk

think of Waterfall DeFi as a risk market, where risks are traded permissionlessly

Q3. What are the major milestones Waterfall DeFi achieved so far & what are in the future pipeline?

Ans — We went multichain — tapping into the greatest protocols with great yield (sometimes up to 45% for our riskier Junior tranches!)

We have good partners — Alpaca, Venus, TraderJoe, Benqi are our friends to work with and we aggregate their farms to their vaults to tranche and generate fixed/volatile yield products to userss!

Upcoming, what to expect?

CeFi product aggregation, we see some Centralized Lending products are failing, we want to mitigate the risk for our users, so we are looking in to deployment to Ethereum and its roll ups so we can tap deeper in to the space.

Questions Asked on Twitter for WaterFall DeFi Team!!

Q1. What is risk Lego protocol? Well, does this make everything compact and manage risk?

Ans — Essentially, when you invest in a Waterfall DeFi product, you’re investing in a portfolio of different assets that are divided into tranches based on their risk. The higher-risk tranches will have higher yields than the lower-risk tranches, but they’re also more likely to experience losses.

The lowest-risk “senior” tranche investors are expecting a fixed, albeit lower, yield. So when the overall portfolio yields go up due to the overall rise in prices, these investors will be the first to benefit. The remaining “mezzanine” and “junior” tranches will go next, splitting the increased yield proportionately.

If the yield increase is dramatic, the mezzanine/junior tranches will experience a larger share of the gain, while the senior tranche will experience a smaller share. However, if the yield is not that high, the senior tranche will still get their fixed yield, while the mezzanine and junior tranches might not get anything at all.

This is a way to mitigate the risks associated with investing in cryptocurrencies and other financial assets, without having to trade frequently or risk overexposure. By taking a step back and splitting your investment into different tranches, you can minimize the chances that any one type of risk will take down your entire portfolio.

Take the current crypto crash. While the plunge caused almost all digital assets to drastically lose value, Waterfall’s senior and mezzanine tranches weathered the storm and kept their 3–5% returns dripping steadily. If that’s not a testament to the power of risk tranching, we don’t know what is.

Q2. I realized that senior tranche users will sacrifice some of their earnings to junior tranches. What is the reason of this? Is there a diagram where we can see the advantages of slicing?

Ans —

basically, senior tranche users are sacrificing their yield for protection from junior tranche users

when pool rewards from farms are aggregated and released to users, senior tranche depositors will get paid in their fixed yield first

the rest of the yield goes to junior tranche users

this basically means, if the yield got back is low, senior tranche users will get paid their money in full

but junior tranche users might sometimes get nothing or lose a slight amount of capital

however, in normal market conditions, junior tranche depositors usually get extra organic yield (e.g. 10%, vs 4% they can deposit by themselves to Alpaca Finance)

So it’s essentially a marketplace for risk to exchange hands, higher risk for higher reward and vice versa.

Q3. We saw LUNA coin getting busted, you are offering 15% APR on stables, could you talk about the risks?

Ans — I can tell you we have zero exposure to LUNA, UST, and any of their associated farm products

We have an internal risk committee that rates and evaluate the riskiness of farms, and checks out their smart contract and mechanisms to make sure everything makes sense before deploying users’ capital in to the vaults

Consider us like yearn where we keep EXTRA high standards on our aggregating products, so we mostly deploy to big farms like Alpaca, Venus, Trader Joe, Benqi and slice the risk to different people with different risk tolerance.

This is a very good question because security is really important to us and our products.

Q4. I understand that Waterfall charges small commissions for withdrawing and depositing funds on the platform. So, can you explain what you do with the funds raised? Are they used entirely for the continued development of the project or are they instead used to benefit the holders?

Ans — We have been accumulating the fees for now, we are still working on the mechanisms to let the community and WTF token holders on what to do with the profits

Right now we do have a veWTF vote escrow staking mechanism, so stay tuned on that🙌

Q5. Could you tell us the mechanism that let you share 50% APR on BNB deposits?

Ans — To be frank, quite some amount of APR comes in $WTF tokens to incentivize our community to try out our products. Do be reminded that they are subjected to a 3-months ve-staking lockup but you can choose to lock your rewards longer up to 2 years to earn a juicy 400% APR staking return

But on the organic side of the yield, we are seeing surging demand of BNB lending on various markets such as Alpaca Finance, and we are not letting that yield go

So therefore we are bringing it to users that either flavors stability or volatility, if you wanna play safe you get a good, well yield first from all the yield farmed, and if you are risk players you get all the rest of that juicy yield after yield is payed out to senior tranche depositors

Along with the $WTF rewards program we have there you get 50% yield on BNB

Of course, it will decrease if more people deposit, so be quick! haha

Questions Asked by our BlockTalks Community Members during live Session to WaterFall DeFi Team!!

Q1. can the Waterfall Defi team explain a bit about the use of $WTF and $veWTF tokens? and how do we get those two tokens?

Ans — $WTF is the value accrual and the governance token, as team are working on the project to become further autonomous and decentralized, and user’s staking $WTF to become vote escrowed: ve-WTF, we will be enabling more value and governance rights to our token holders and stakers.

Q2. Whether decentralized platforms, on the other hand, are more transparent and secure, they give users more control over how their assets are used. ?

Ans — Yes, we are huge believers on decentralized system and open finance

we think that, by having everything available to use and read on chain, it prevents large amount of malicious insider activities that extract what’s belongs to the customers and depositors of financial products

so that’s why we built waterfall, aside from amms and lending markets, we think the space desperately need a risk market for all users

not everyone wants to take on impermanent loss and possibility of protocol hacks/ large interest rate volatility

so here we are to safe the guys while offering versatile options to enable people to make riskier plays and take on the risk in the market.

Q3. what breakthrough do you want to develop in 2022–2023?

Ans — I think it’s really important for us to keep the innovating spirit

To be fair, we never forked any contracts for our core tranching mechanics and we built from scratch

1. we know more how the code works

2. we truly making new products that better serve the community

so we will be keep on building, and working on the greatest ideas that helps balance the risk appetite for all people in web3

next up we are looking into ethereum markets and we want to be one of the risk market participants in it alongside protocols like barnbridge :)

Q4. Which wallet is waterfall defi compatible?

Ans — metamask, wallet connect,

what wallet you use? let us know in our telegram group @waterfalldefi and we can integrate if it’s not the above two listed

Q5. So far the only blockchains with which your platform is compatible are AVAX and BNB. Do you plan to integrate new blockchain networks to further extend the reach of Waterfall DeFi? What plans do you have in this regard to diversify the type of assets your network operates with?

Ans — I think it’s really important to stay open minded, we are looking into new lending markets in ethereum right now, as well as formulating mechanisms to create our risk market take for CeFi lending products (we see the turmoil lately in the CeFi lending space, and we want to help)

we will look for working in roll-ups integration when things are more smoothen up in the future.

Here are some important links of WaterFall DeFi👇🏻



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